All Forum Posts by: Jason Wray

Ohio - Great spot, I would add Florida, in or around Pinellas County, Citrus County, Lee/Charlotte, TN - Knoxville, Oregon is worth taking a look along the Oregon Coast as well great STR and annual cash flows.

Luckily, you only need 5% down to buy a new primary 2-4 unit home if you are going to buy it as an investment you only need 15% Max down payment. 1031 exchange is a great way to avoid capital gains if you "sell" the home but what about if you refinance and took cash out. The cash out is "Tax free" and can be used as a down payment and to build a safe net by putting 3-6 months reserves in a savings account. Could you cash flow on the rents if you decided to use cash as a down payment on the new home with the down payments listed above and renting out instead of selling?

Keep in mind mortgage rates are down substantially since December not many people are talking about primary rates but they are down. That means for purchase and for cash out refinance rates are down which could help keep the departing home as a rental versus selling.

To go a step further you could say the PMI on the purchase if less than 20% down might cause higher payment/cash flow issues but rates with less than 20% are actually lower due to PMI. Mortgage rates with 20% down are either the same or higher than the 5% down model which sounds weird but the higher rate is due to the lack of PMI (Less insurance/Higher risk). Just as an FYI.

No matter what state you live in if you are in the Medical field there is a loan program built to save you money. The program allows for up to 100% financing on any primary home up to $1-Million dollars. Requires 5% for loans above $1M up to $1.5Million and 10% down for loan above $1.5M up to $2Million. There is NO PMI, No prepays, and its a great way to get into the real estate market to start building your real estate portfolio to retire. You can use this loan to buy a home and after a year you could transition it into a rental home and buy another home.

There are multiple medical titles or degree's approved under this program.

Its a creative way to use some of the loopholes in banking to help build a future in real estate!

Reach out to me for more information or for rate and terms to qualify.

Jhun,

Yes, your wife can use an FHA or Conventional loan to buy the next home in her name. You can also use a HELOC from the current home for the down payment. For the next home your wife only needs 5% down not 20% for the new primary if you go conventional regardless of number of units with new guide lines.

My advice as a banker take out enough for the down payment and extra in case you need to do any renovations on the new or old house. Its always good to have a little extra in case something happens unexpectedly.

I would also tell you to consider doing a cash out refinance converting the current loan from FHA to conventional while taking out the cash. That way you get the cash you need, convert loan from FHA to conventional and remove the burden of the HELOC as second lien position. Helocs can also cause DTI or asset/PITI reserve issues when buying more REI down the road.

Greg,

Unless you are using a Hard money lender you will not be able to use a credit card as a down payment. You cannot use a revolving credit card to use a down payment it must come from a liquid reserve, asset or open end mortgage like a HELOC.

You will also be required to have and show assets and in most cases a PITI reserve of 3-6 months depending on the loan size and program. Jumbo or 2-4 units can require 6-12 months or if Fico scores are low. That being said that must also be shown in liquid reserves, assets, 401K IRA, but never a from a credit card or debt even a HELOC cannot be used as a PITI reserve or asset.

Chris,

What are you looking to finance or accomplish I ask because with a quick Yelp review there are some negative reviews.

The lender cannot use any positive income for the departing residence until you have 12 months cancelled checks or a Schedule E to confirm Net rental income. What can be done is the bank/lender can "Wash" the payment from your DTI. That is more than likely what they are doing meaning they will use the lease/rental agreement to eliminate the payment but "Not" show an income.

Keep in mind its a "very grey" area meaning the underwriter can "Kill the deal" if your "new lease" or agreement shows that you required "First, Last, or Security" as part of the new rental agreement. The underwriter will require a copy of the cancelled checks for all (3) of those checks. If you cannot supply them the UW will suspend the loan causing a delay or denial. I mention this because a lot of loan officers try and use this trick to "Wash departing rents"

If the home will not be rented and your loan officer is asking you to supply this and the underwriter finds outs the loan will be cancelled.

Sometimes a customer or even the loan officer can confuse the guide lines or what was said by the processor. The guide lines usually (depending on program) requires a few things and having 75% LTV with 25% equity in the property may be required in order to wash the payment on the departing residence.

Just double check and ask more than once if they will require an AVM or an appraisal to gauge equity in the departing residence.

No need to panic I just want you to have clarity and a back-up conversation to avoid loss money and time.

Latoya,

Most banks require a payoff good for 30 days at closing and some will allow you to use the "Per diem" to calculate the days if a 30 day payoff is short. The problem the client has is they were aware of the reimbursement and the loan officer/banker/title company could show they are at fault for not disclosing the final reimbursement payment since the payoff was ordered prior to the fund received.

Although the bank/title company order and prepare documentation and stride for accuracy they also have a mutual line that requires full transparency. When it comes to renovation loans/hard money and either disbursement payments or fund phases its a communication element. It could be stated the borrower knew funds would be received late in the process and did not disclose that information.

Sounds like it was a simple mistake were the borrower "Assumed" the bank was doing its job and did not communicate in detail the funds being reimbursed a week before closing. Regardless of the issue/mistake the bank is owed money and the borrower is legally required to resolve to clear/release lien so they can fund and file book and page.

I would advise your client to not argue or delay this to avoid interest and additional fee's and figure out a payoff and resolve quickly.

Joe,

You cannot refinance until you have 6 months title seasoning. You could start the application process in May to close in June but by then the rates should be much better.  When you purchase a home and pay in "All cash" or use a line of credit there is "No 6 months wait".  Having a loan/mortgage causes the 6 month wait.

What you are experiencing is a specific guide line but it is also measured with overlays.  So Yes, there are Banks/Lenders that "Do not" have overlays and have "Walk arounds".  Typically its a "Directly Endorsed" Fully Delegated Bank.